Egypt business activity shrinks for 13th month in row, HSBC says

Workers wait for customers near empty chairs in front of a popular tourist area in old Cairo. (File photo: Reuters)

Egyptian business activity shrank for the 13th month in a row in October but at a much slower rate, suggesting the economy may be improving after months of renewed political turmoil, a survey showed on Tuesday.

Most of Egypt has been under nighttime curfew since mid-August, when security forces broke up sit-ins of supporters of President Mohamed Mursi, deposed by the army on July 3 following mass protests against his rule.

Hundreds of people have died in clashes between security forces and Mursi supporters.

The seasonally adjusted HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector rose to 49.5 points in October, up from 44.7 points in September and moving closer to the 50 mark separating growth from contraction.

October’s reading marked the slowest contraction since Egyptian business activity began to worsen in October last year, according to the survey of around 350 private sector firms.

“It’s the first encouraging reading in a year... The stabilization is happening at a low level, though," Simon Williams, chief Middle East economist at HSBC, said in an accompanying statement.

“It will take a long run of month-on-month gains before the losses of the past year will have been reversed. In the meantime, unemployment will remain high and gains in activity will remain contingent on recent relative political calm being maintained.”

The army-backed interim government is working towards a new constitution and holding elections early next year. Saudi Arabia, Kuwait and the United Arab Emirates pledged Egypt $12 billion in aid days after Mursi’s removal.

The index for output rose to 50.5 points in October from 42.1 in September, indicating the first month-on-month growth in output since September 2012, the survey showed.

The decline in new orders slowed last month, with the subindex improving to 49.3 from September's 41.7. The new export orders gauge also rose to 48.3, up from 41.7 in September.

Businesses cut staff at a slower pace last month, with the employment index rising to 49.0 from 46.5 in September, the survey showed.

Companies trimmed their output prices, with the related index inching down to 48.4 from 49.5 in September, moving in a tight range for the fifth month in a row.

Egypt’s urban consumer price inflation rose to 10.1 percent in September from 9.7 percent in August. It had reached a two-year high of 10.3 percent in July.

Last Update: Tuesday, 5 November 2013 KSA 13:59 - GMT 10:59

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Egypt business activity shrinks for 13th month in row, HSBC says
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